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O'Brien: 11 Predictions for 2011

Last year, I offered up 10 predictions for 2010 and got five right.

Ones I nailed: Palm was sold; Apple released a tablet and Google a phone; Silicon Valley posted gains in the overall number of jobs; the number of public companies in the valley continued to decline; Facebook and LinkedIn didn't go public.

Ones I whiffed: Intel didn't settle all outstanding legal disputes; Twitter's traffic did not decline (though it's flattening in the U.S.); Google did not get hit by an antitrust suit (but my bet is it's just a matter of time); Cisco Systems did not buy Dell (again, just a matter of time).

There's one squishy prediction: I said there would be four valley cleantech IPOs. Tesla went public, but Solyndra withdrew its IPO and Silver Spring Networks of Redwood City never filed as expected. Now, if you count the biofuels industry, Redwood City's Codexis and Emeryville's Amyris had IPOs. And since I'm counting them, I'm still short. But darn close.

Without further ado, here are my 11 predictions for 2011:

1. Facebook will pass 1 billion users. It will happen eventually, but the math will make this one close. Facebook has 550 million members and is adding 700,000 per day. That would put it over 800 million in 2011 at its current pace. But I'm betting that rate will accelerate just enough next year to put it over the top. And if China lets Facebook in, fuhgettaboutit. If Facebook isn't thinking interplanetary

yet, it ought to be calling Vint Cerf at Google to see how his efforts to extend the Internet to other planets is working out. Because that may be about the only place this juggernaut will have left to conquer.

2. Yahoo CEO Carol Bartz will go. Shh. Listen. Hear that? It's the sound of the guillotine blade being raised. Perhaps, in retrospect, this was doomed from the start. While it sounds trivial, her inability to articulate Yahoo's mission in under 140 characters is a bigger failing than it seems. Yes, as Bartz says, Yahoo remains big in Peoria and other flyover hotspots. (And hold your e-mails, because I'm from Kansas. Go Chiefs!) But it's not enough to save her neck. Good news for the Yahoo board: I hear Meg Whitman is looking for a job. Just sayin'.

3. Hewlett-Packard will buy SAP. This is the deal that has Oracle's Larry Ellison squirming and trying to rip the reputation of HP. Ellison is probably hoping to make HP feel too defensive to try something this astonishing. When I've raised the possibility of this deal, people say, "Never in a million years." Ah, but how quickly we forget: SAP got close to the altar with Microsoft just a few years ago. And nobody looks at SAP today and thinks it's a healthier, happier company. Given that HP hired SAP's former CEO, it now has in Léo Apotheker the man who can make this deal happen, and, more important, make it work.

4. No big Internet IPOs. Zynga, LinkedIn, Facebook, Yelp, Groupon. Across Sand Hill Road, folks are praying for one of these to go public and revive the IPO market. Keep dreaming. The next generation of great Web companies are running from IPOs like they're being pursued by an army of zombies. Keep running, I say.

5. Google will buy Twitter. Except for search, Google has become the house that acquisitions built. When it comes to money, the company has enough to buy a continent or two. And when it comes to social, its in-house attempts to create a social-networking service have fallen flat. Time to buy its way in. So far, the company has been ditched by Yelp (reportedly) and Groupon (supposedly). Twitter's latest valuation puts it at about half what Google wanted to pay for Groupon. Google should pony up the cash and buy the mother of all unsustainable businesses: Twitter. And Twitter should say yes because, despite its protestations to the contrary, there is no business model there. But Google will figure out a way to make money off Twitter's huge user base.

6. China will have more tech IPOs than the U.S.: While you were sleeping, 41 Chinese companies went public on U.S. stock exchanges this year. Expect to see more China-based tech companies go public in the U.S. than domestic companies.

7. Apple launches its long-awaited music streaming service. Apple is just finishing work on a massive new data center in North Carolina. The company bought music streaming service LaLa a year ago, and then shuttered it. Expect to see that technology reappear as part of the long-awaited iTunes streaming service. That will include some kind of subscription plan and the ability to store your music online and listen to it anywhere.

8. Venture capital blues: Expect both fundraising and investing to remain flat. While some firms will thrive, there's still an ongoing shakeout in this industry as the number of partners will continue to dwindle and returns will remain poor.

9. Silicon Valley jobs will remain flat: While tech will continue its rebound in hiring, local and state governments are still in economic free fall. And the construction industry is on life support. Job losses will offset tech gains. The fact that the number remains level will mask tremendous turmoil underneath as one sector of the economy continues to experience a hiring frenzy, while another continues to print pink slips.

10. Cloud bubble: The next great bubble will be around cloud computing. Things were already heating up this year as companies bid up storage companies. And the stock of Salesforce.com, the mother of all cloud computing companies, has been on a rampage. By the end of 2010, at least 10 cloud computing startups raised more than $20 million in venture capital. These include such hot names as Joyent of San Francisco, which nabbed $15 million from several backers, including Intel. 2011 will be the year that many larger players swoop in and start buying up these racehorses. Expect vicious bidding wars and talk that some are overpaying.

11. Broadband bill comes due: The surge of mobile data traffic and video will cause such severe network congestion that carriers such as AT&T and Verizon will at last do the thing that everyone has feared: They will institute charges based on usage. The path to this has been cleared somewhat by the recent adoption of soft net neutrality rules by the Federal Communications Commission. These new plans will ripple across a wide range of businesses and users who will be forced to make tough decisions about what they can and can't afford, and how much of the costs they can pass along to customers.